Correlation Between Destra Multi and MFS Government

Can any of the company-specific risk be diversified away by investing in both Destra Multi and MFS Government at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Destra Multi and MFS Government into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Destra Multi Alternative and MFS Government Markets, you can compare the effects of market volatilities on Destra Multi and MFS Government and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Destra Multi with a short position of MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destra Multi and MFS Government.

Diversification Opportunities for Destra Multi and MFS Government

-0.35

Correlation Coefficient

Destra Multi  MFS Government

Very good diversification

The 3 months correlation between Destra and MFS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Destra Multi Alternative and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets and Destra Multi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Destra Multi Alternative are associated (or correlated) with MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of Destra Multi i.e., Destra Multi and MFS Government go up and down completely randomly.

Pair Corralation between Destra Multi and MFS Government

Considering the 90-day investment horizon Destra Multi Alternative is expected to generate 2.0 times more return on investment than MFS Government. However, Destra Multi is 2.0 times more volatile than MFS Government Markets. It trades about 0.06 of its potential returns per unit of risk. MFS Government Markets is currently generating about 0.03 per unit of risk. If you would invest  622.00  in Destra Multi Alternative on September 4, 2024 and sell it today you would earn a total of  277.00  from holding Destra Multi Alternative or generate 44.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Destra Multi Alternative  vs.  MFS Government Markets

Destra Multi Alternative

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Destra Multi Alternative are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat inconsistent primary indicators, Destra Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MFS Government Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Government Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, MFS Government is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Destra Multi and MFS Government

The main advantage of trading using opposite Destra Multi and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destra Multi position performs unexpectedly, MFS Government can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MFS Government will offset losses from the drop in MFS Government's long position.

The idea behind Destra Multi Alternative and MFS Government Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.